FEB 14, 2011

The Cost of Public Sector Benefits

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Madison – In an effort to raise awareness about the cost of public sector employee benefits today Governor Walker’s office released the following fact sheet.

In 2001 taxpayers contributed $423 million dollars to state employee health insurance premiums, while in 2011 taxpayers contributed more than $1 billion dollars. In 2011, state employees paid $64 million toward their health insurance, or about 5.6% of the total cost. (ETF Health Care Analysis)

From 2001 to 2010 taxpayers spent more than $8 billion dollars on state employee health care coverage—over the same period of time state employees contributed about $398 million. (ETF Health Care Analysis)

Public employers contributed almost $1.37 billion to the state’s pension fund in 2009, while employees contributed about $8 million, or about 0.6%. (LFB paper 84 Wisconsin Retirement System, Table 28)

From 2000 to 2009 taxpayers spent about $12.6 billion on public employee pensions, during the same period public employees contributed $55.4 million. (LFB paper 84 Wisconsin Retirement System, Table 28)

When looking at state operations, state employees account for about 60% of taxpayer cost—77% of state operations for the UW are employees, 70% for corrections, 63% for health services. (State Budget Office Memo 2-9-11)

Wisconsin taxpayers currently make nearly a 100% payment for the employee portion of the public sector pension contribution. Illinois and Indiana taxpayers contribute the entire employee portion as well, Iowa, Michigan, Minnesota and Ohio pay 0% of the employee contribution. (State Budget Office Memo 2-9-11)

Public employees in Wisconsin are vested in the retirement system immediately, while in Illinois it takes 8 years, 10 years in Indiana, 4 years in Iowa, 10 years in Michigan, 3 years in Minnesota, and 5 years in Ohio. (State Budget Office Memo 2-9-11)

Survey data finds that private employer HMO plans in Wisconsin typically require a co-pay of $18 per office visit, $45 per specialist visit, $75 per emergency room visit, or $175 in-patient treatment. The average health insurance premium for these plans averaged $108 per month for single coverage and $261 for family. (State Budget Office Memo 2-9-11)

Taxpayers spent $733 million of general purpose revenue on fringe benefits for state employees in fiscal year 2010. (State Budget Office Memo 2-9-11)

Fringe benefits made up 25.6% of school district expenditures in 2008-09. (State Budget Office Memo 2-9-11)

Along with the release of this information Governor Walker’s spokesman, Cullen Werwie, released the following statement:

Wisconsin is in a fiscal crisis because past budgets, which were supported by members of both political parties, used one time sources of revenue for ongoing operating expenditures and did little to address the long-term financial challenges facing our state.

Both democrats and republicans know that state workers do great work. But unfortunately many private sector workers who are also hard working, good people either lost their job, took a pay cut, or saw their benefit package reduced as a result of the recent economic downturn. Governor Walker’s budget repair bill strikes a fair balance—asking public employees to make a modest 5.8% pension contribution, which is about the national average, and 12.6% health insurance contribution, which is about half the national average.

Governor Walker is going to engage in an honest discussion about the cost of our government. He will continue to offer long-term budget reforms that fix Wisconsin’s current fiscal disaster, which will ensure sustainable delivery of the core services taxpayers demand.